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    Home > Biochemistry News > Biotechnology News > The Predicament of Yuanqi Forest: Competitiveness is weak, where is the baton of Yuanqi Forest

    The Predicament of Yuanqi Forest: Competitiveness is weak, where is the baton of Yuanqi Forest

    • Last Update: 2021-04-16
    • Source: Internet
    • Author: User
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    A year ago, the new crown epidemic caused a sharp drop in the number of travelers, and indirectly hit the ready-to-drink beverage market that relied on outdoor scenes.

    In the beverage business revenue of the first half of 2020, Uni-President and Master Kong recorded year-on-year declines of 7.
    4% and 4.
    1%, respectively.
    Nongfu Spring’s annual growth rate of bottled water declined slightly, but its juice revenue plummeted by 36.
    4%.
    According to the official explanation, this year's epidemic and floods affected the transportation and sales of retail outlets.



    Vitality Forest, which specializes in sugar substitute drinks, seems to be the biggest winner of the year.



    On March 30, Yuanqi Forest completed a new round of strategic investment led by Sequoia China, Warburg Pincus, Lcatterton, and co-investors from Temasek, Gaorong, and Longfor.


    This brings the valuation of Yuanqi Forest to US$6 billion, and in the B round of financing in October 2019, this figure was also fixed at US$580 million.




    With the growth rate of ten times a year, Yuanqi Forest is surpassing the "Shui Mao" Nongfu Spring and "Milk Mao" Vitasoy in the Hong Kong stock market to become track stars.


    From the perspective of revenue from all categories, Yuanqi Forest is only 13% of Uni-President Group, but the valuation has already surpassed Uni-President's nearly 30 years of operation.




    Yuanqi Forest tries to tell the story of the rapid rise of an Internet brand.


    At the dealer conference at the end of last year, Tang Binsen, the founder of Yuanqi Forest, set the sales in 2021 at 7.
    5 billion, which is more than three times higher than that in 2020.




    Behind it is a faster expansion strategy.


    According to 36kr, in 2020, the sinking layout of Yuanqi Forest will be initially completed, and the products have been launched in small and medium-sized cities and even counties in China.




    However, the expansion will not be smooth sailing.


    During Double Eleven in 2020, Yuanqi Forest won the No.
    1 sales of beverages on all platforms, overwhelming Coca-Cola, but 70% of its revenue came from sugar-free soda sparkling water.




    For Yuanqi Forest, the growth lever has been activated.


    At the end of last year, Yuanqi Forest's Chuzhou, Tianjin, and Guangdong factories started at the same time, and the annual production capacity is expected to reach 110 million boxes.
    Behind it is a rookie brand that has long been a wild vulture, hovering beyond the moat of the giant to pick up leftovers.




    Erythritol Siege

    Erythritol Siege



    Why did Yuanqi Forest only burst one type of sparkling water? Because that is the dead end of the giants' competition.



    Alexander Tamas, a partner of DST Investment Group, has a theory of "geographical arbitrage".


    Its logic is very simple.
    The world will never reach a "flat state", and there is a huge information gap and profit margins between the developed and underdeveloped sectors.




    Tang Binsen, the founder of Yuanqi Forest, is a faithful believer in "geographical arbitrage".


    At that time, his identity was the CEO of Zhixingtongtong, and his flagship product was "Happy Farm".
    Tang Binsen was deeply inspired by the global distribution of Happy Farm:



    "The experience of the past few years has made me more convinced of the value system of geo-arbitrage.


    "



    This kind of geo-arbitrage thinking gave birth to the vitality forest.
    According to Tiger Sniff, Zong Hao, vice president of Yuanqi Forest, attributed the selection of this beverage upstart to global selection and localization.
    In fact, Japanese beverage companies Suntory and Itoen are important references for Genki Forest.
    The two products Guono Daily Tea and Burning Tea in the first year of the establishment of Yuanqi Forest are behind Japanese fruit tea and sugar-free tea.



    In the domestic market, the sugary tea market is dominated by giants such as Uni-President, Master Kong, and Nongfu Spring.
    Market feedback has also confirmed this point.
    The data of burning tea using erythritol as a sugar substitute is better, while the data of fruit daily tea using fructose is not good.



    In the process, Yuanqi Forest fought a tough battle with Nongfu Spring to upgrade the consumption of sugary tea.
    As a result, the new Nongfu Spring Tea π, which has a strong distributor channel, won.
    Only one month after the launch of Tea π, it signed the South Korean idol group Bigbang as the spokesperson, and signed Wu Yifan in 2017.
    Guono Daily Tea had no advantages in terms of channels, brands, marketing, etc.
    , and then the entire business line was cut off.



    This has become an environmental factor for Yuanqi Forest to cultivate sugar-replacement beverages and take the route of health drink experts.
    The domestic sugar-sweetened tea and sugar-free tea market is in a situation where the giants are caring up.
    According to data from CICC, in 2019, Japan's sugar-free tea accounted for 83% of the tea beverage market, while China's only 5.
    2%.
    Even if the market size is smaller, Nongfu Spring’s Oriental leaves, Uni-President Tea Liwang and other products still dominate the market segments.



    Yuanqi Forest successfully captured the erythritol gap in the sugary beverage market.



    After the success of erythritol soda sparkling water in one fell swoop, the vitality forest was out of control.
    Among the many products it currently releases, except for early fruit tea, corn beard tea, micro-bubble juice, burning tea, soda sparkling water, Beihai pasture yogurt, pet muscle collagen water, milk tea, and alien energy drinks are all used Erythritol.
    On platforms such as Station B, Zhihu, and Xiaohongshu, popular science content that emphasizes that erythritol does not grow meat abounds.
    There is no doubt that Yuanqi Forest has become a spokesperson for erythritol in China.



    This also binds Yuanqi Forest to the erythritol track.
    Tang Binsen revealed that Yuanqi Forest’s SKU R&D investment is several times the industry level, and 95% of the products are waiting to be launched.
    But judging from the sales of past products, the vitality forest without erythritol is like a dehydrated fish.

    After the “Stud” marketing of the sugar-free concept in 2020, the new product runs along the new track of erythritol, which is obviously more in line with the ROI of the vitality forest.
    This means that in the "product year" of 2021, it is difficult for the new products of Yuanqi Forest to get rid of some of the characteristics of soda sparkling water-the high cost of 1 yuan per bottle, the erythritol version of traditional sugary drinks, and the main female market And consumption upgrade concept.
    Yuanqi Forest has enclosed itself in the siege of erythritol.



    Moat and vulture

    Moat and vulture



    In the year of the Beijing Olympics, a drink was once popular on domestic campuses.
    Its advertising scene is that men and women are at the same table and drink "wine" in class.
    The beautiful teacher raised his glasses in astonishment: "Drinking beer?" All the students said to the teacher in unison: "You are OUT!"



    The name of this drink is Beer Tea Shuang, and the producer is Wahaha.
    The products are made of green tea, oolong tea and malt extracts.
    The packaging also imitates bottled beer.
    The biggest feature is that the first taste is the same as beer, but the second taste becomes tea and it is alcohol-free.
    According to Wahaha’s official statement, Piercha Shuang has set off a fashion trend among the post-80s and post-90s groups.



    But the fact is that Pier Cha Shuang withdrew from the Beijing market only one year later, and withdrew from the national market three years later.
    The reason is clear-the target users of beer don't want to drink it, and the target users of non-beer don't want to drink it even after trying it out.
    This product became popular for a while, but almost no users repurchase it.



    Beer Cha Shuang can explain the overall downturn of sugar substitutes in the beverage market dominated by giants in the past.



    Coca-Cola has tried to launch sugar-free carbonated beverages, including sugar-free versions of brands such as Sprite, Coke, Fanta, and Diet.
    But the results are average.
    According to the Yangtze River Commercial Daily, the sales volume of sugar-free cola is hard to match that of conventional cola.
    There are fewer consumers who really need it, and most of them have a taste of taste.



    The essence of sugar substitute drinks is a substitute for sugary drinks.
    Alternatives need to find an indecisive "middle group", that is, the user stickiness of sugary drinks or alcoholic beverages that are "hearty and courageous".
    From a purely taste perspective, both beer tea cool and Coke Zero are both successful developments in the development of beverage flavors, but they still cannot compare with the original beer and Coke.
    This has caused the lack of target users-sugar-hungry groups have better alternatives, while sugar-rejecting groups are not sticky, and the market segment continues to shrink.



    Another reason why giants rarely make sugar substitutes is their unwillingness to disrupt the price system and the market share behind them.
    Take Coca-Cola's Aspartame version of Coke Zero as an example.
    The retail price of 3 yuan per bottle maintains the price of sugary Coke, but the taste is greatly reduced.
    In the words of consumer reviews, it is an "awkward industrial sweetness.
    " And if you use higher-cost sweeteners such as erythritol, it will inevitably push up the price, and it will not be able to attract original cola consumers to choose as a substitute.



    In the domestic market, similar pricing of the same category is the result of competition among the giants.
    Taking sugary tea beverages as an example, the prices of sugary black tea and green tea from Uni-President and Master Kong are almost the same.
    In the upgraded fruit teas in recent years, Nongfu Spring Tea π and Uni-President Xiaoming are also almost the same.
    Any party launching sugar substitute beverages will encounter pricing pressure from competing products, disrupting the market share of the original product pricing system.



    This gives new brands without pricing system room to survive.
    Giants such as Uni-President, Master Kong, and Nongfu Spring prefer to make sugar-free beverages rather than launch sugar-substitute versions of mature products.



    And whether Yuanqi Forest will follow the mistakes of beer tea coolness depends on whether it can solve the problem of awkward positioning of substitutes.



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